On December 1, 2014, Nicole Company gave Dawn Company a P200,000, 12% loan. Nicole Company paid proceeds of P 194,000 after the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments of P 4,450, beginning January 1, 2015. The repayment yield an effective interest rate of 12% at a present value of P 200,000 and 13.4% at a present value of P 194,000. A. What amount of interest income should be reported in 2014? B. What amount should be reported as accrued interest receivable on December 31, 2014?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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Chapter1: Investments: Background And Issues
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On December 1, 2014, Nicole Company gave Dawn Company a P200,000,
12% loan. Nicole Company paid proceeds of P 194,000 after the deduction of a P6,000 nonrefundable loan origination fee. Principal and interest are due in sixty monthly installments of
P 4,450, beginning January 1, 2015. The repayment yield an effective interest rate of 12% at a
present value of P 200,000 and 13.4% at a present value of P 194,000.


A. What amount of interest income should be reported in 2014?
B. What amount should be reported as accrued interest receivable on December 31, 2014?

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